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NEW YORK | Stocks made a stunning comeback Thursday, as investors snapped up some of the financial sector’s stronger players and pumped money into the materials and transportation sectors. The Dow Jones Industrial Average rose more than 160 points.

A drop in crude below $101 a barrel also helped reverse Wall Street’s early losses, particularly among automaker and transportation stocks like railroad CSX Corp., Ford Motor Co. and General Motors Corp.

Early in the day, most bank stocks sold off on nervousness about Lehman Brothers Holdings Inc.’s announcement Wednesday that it plans to sell its investment management unit and spin off its commercial real estate assets. The company is seeking to raise cash after making bad bets on holdings tied to real estate.

Traders and analysts appeared unimpressed with the steps outlined by the nation’s No. 4 investment bank, punishing the stock. Citigroup and Goldman Sachs lowered their ratings on the stock to “hold” from “buy.” Lehman fell $3.03, or nearly 42 percent, to close at $4.22.

“Not everybody’s in trouble, and people are realizing that,” said Anthony Conroy, managing director and head trader for BNY ConvergEx Group. He added, however, that the market is very rumor-driven right now - which can make for very volatile price movements.

The Dow rose 164.79, or 1.46 percent, to 11,433.71, after falling by as many as 170 points in the early going. Broader stock indicators rose. The Standard & Poor’s 500 Index rose 17.01, or 1.38 percent, to 1,249.05, while the Nasdaq Composite Index rose 29.52, or 1.32 percent, to 2,258.22.

A few marquee financial names on Wall Street logged steep declines as investors worried about the health of their balance sheets. Merrill Lynch & Co. fell $3.87, or 16.6 percent, to $19.43, and Wachovia Corp. dropped 80 cents, or 5.3 percent, to $14.28.

But JPMorgan rose $2.25, or 5.7 percent, to $41.65; Wells Fargo rose $2.15, or 6.8 percent, to $33.85; and WaMu recovered from a steep loss to finish up 51 cents, or 22 percent, at $2.83.

Light, sweet crude fell $1.71 to settle at $100.87 a barrel on the New York Mercantile Exchange as a strengthening dollar added to investors’ buying power. Still, gas prices were up, and the market kept at watchful eye on Hurricane Ike amid worries that it could damage energy installations in the Gulf of Mexico.

Investors also faced fresh concerns about consumers after the Labor Department reported that the number of people seeking jobless benefits dropped 6,000 last week to a seasonally adjusted 445,000. Analysts, on average, had expected a reading of 440,000. The four-week moving average rose slightly to 440,000.

The average number of claims remains at a level that some economists say is worrisome. And the report comes a week after the government said the nation’s unemployment rate rose to 6.1 percent in August, a five-year high. A shaky job market can be hard on consumers who also face tighter credit and a weak housing market. That worries investors because consumer spending accounts for more than two-thirds of U.S. economic activity.